Children with specific language impairment (SLI) have difficulty comprehending and producing narratives, skills critical to the development of social and academic success. Narrative difficulties have been theorized as primarily a competence issue, with deficits in the development of linguistic skill and narrative schema. Recent research has documented a dynamic relationship between processing demands and performance on both word and sentence level processing tasks for typically developing children and children with SLI. This theoretical framework may account for narrative difficulties experienced by children as well; however, research has not examined the relationship between working memory/processing demand and discourse level functioning. The goal of this project is to investigate the relationship between language impairment, narrative abilities, and working memory/processing demands. Specific aims are to: 1) examine the relationship between working memory, level of language functioning, and linguistic and cognitive aspects of narrative discourse in children with SLI in comparison to age- and language-matched control groups, and 2) evaluate a hypothesis that attributes narrative difficulties to limitations in resource capacity. Experiment I will examine the relationship of working memory to narrative comprehension and production (linguistic complexity, structural complexity), in subgroups (receptive-expressive impairment and expressive language impairment only) of children with SLI and language- and age-matched peers. Experiment II will involve the described subject groups to test a hypothesis of system tradeoffs of storage and processing in working memory when task demands are high by comparing performance on narrative tasks that vary in linguistic and/or cognitive complexity, while holding other variables that contribute to performance (story length; number of words, protagonists) constant. Findings have theoretical and clinical implications for the assessment and intervention of language impairments.